Glen Barton, Director of US Field Operations
Several years ago at an environment seminar, I heard an EPA official tell a story of being called into a project by the State of Florida. The State had acquired land for a major road expansion. Part of the land held an old chemical plant. He said when he looked at the site the ground was blue and bubbled. The speaker received a big laugh when he told the audience “dirt isn’t usually blue nor should it bubble.” I doubt we would think the story so funny if we owned the property with bubbling, blue dirt. While this story may be extreme, it illustrates the importance of understanding liability when acquiring land. As Covenant Partners expand their building operations, lots become an issue. Those lots need:
- to meet the families’ needs
- be affordable
- have proper zoning and
- have clear title or title that can be obtained
Many times lots are donated to Covenant Partners. Donors want to expand the mission and some want a tax write-off. Many of the donated lots become a win-win for the donor and for the Covenant Partner. However, the Covenant Partner needs to do its due diligence on donated as well as purchased property. That includes a records check and personal inspection of the property. The first stop is the tax assessor’s office in-person or on-line. The Covenant Partner will want to insure the property has proper documentation.
- How many people own the property?
- Are there liens or code enforcement actions?
- What are the zoning/building covenants?
- What flood considerations?
When walking the land have a rough idea of how the house(s) will fit the land. Are there trees in the wrong places? Is the lot going to need fill? Look for things that look out of place, such as pipes in the ground, old tanks, or discolored dirt. Any of these could be clues to previous use or possible contamination. What is the condition of the neighborhood? Does it look safe? What is the condition of neighboring homes? Are there any signs of previous use such as commercial use or farming operations? Are there water and sewer connections? How far is public transportation, schools, grocery stores and hospitals?
Once the Covenant Partner has decided that the land is acceptable there are still things to consider before taking ownership. If it is a donation, the donor will probably want to declare this on his/her taxes. If so, a certified appraisal must be done at the time of donation (see IRS tax form 8283). Prior to the appraisal, it should be decided whether the donor or Covenant Partner will cover the cost of the appraisal. Also, the type of title should be considered as well as determining who will pay for the closing costs. A Warranty Deed and title insurance are good choices. Check with your local title insurance agent on coverage and a property and casualty insurance agent about liability. I also recommend a survey once a decision has been made to acquire the property.
Once you own the property you will want to make sure you keep the grounds maintained until you start the building process or your Covenant Partner could be subject to possible code enforcement fees. Covenant Partners should perform due diligence on every property before purchasing or accepting a donated property. The Fuller Center for Housing Property Acquisition Checklist is a useful tool to review well before ownership.
Walk the grounds. Look for signs of prior use. Was the property used for farming or commercial operations? If so, contamination could be an issue and further inspection is necessary.
Look for old tanks, pipes and discolored dirt. These could be signs of contamination.
Check neighboring properties. Were there gas stations or dry cleaners in the area? If so, contamination plumes can run downhill to subject property, in which case a Phase 1 Environmental Assessment should be completed.
Are there trees that need to be removed or other obstacles that can add to building expense?
Property must have clear title (title insurance required). If title search reveals environmental concerns, a Phase 1 Environmental Assessment would be required.
Look for liens, code enforcement actions and other possible actions.
Is Flood Insurance required?
- Tree removal
- Fill needed
- Local setback and house size requirements
- Proximity to mass transit
- Is the neighborhood safe?
- Schools and services available
For more information, contact:
Director of U.S. Field Operations